Low-Risk vs High-Risk Merchant Accounts

The type of merchant account your business uses will affect its long-term finances. 

Find Out More
 down arrow

What Is A Merchant Account?

A merchant account is a special type of business bank account that allows you to securely accept credit and debit payments. It acts as a middleman between your business's bank and the bank your customer uses to make their card purchases. 

A merchant account is needed to facilitate the movement of money from your customer's bank account to your bank account so, if you want to take electronic payments, you need to get yourself a merchant account.

Compare Providers

Low-Risk vs High-Risk Merchant Accounts

If your business is just starting out, or you want to move into accepting electronic payments, you've probably heard that you need a merchant account. You may have also heard that there are different types of merchant accounts available to businesses, each with its own benefits and drawbacks. 

If you need a merchant account, you need to apply for one. Unlike when you open a normal bank account, you will only be told what charges you need to pay after your application has been reviewed.

This is because the provider you make your application to will perform a check on your business to work out its risk. Unfortunately, there's only so much you can do to influence the check's outcome, as the risk level is largely based on the industry you're in. After the assessment is completed your business will be deemed to be in either a high-risk or a low-risk category. 

The category your business is placed in will influence the charges you pay in fees, with high-risk accounts being more expensive. The fees are more expensive because they need to cover the heightened risk that the payment processors and banks are taking.

Which Industries Are High-Risk?

A high-risk industry is regarded as such due to the likelihood that it will be exposed more to operational or regulatory risk. There are a lot of industries that fall under this description but here are a few of the more common ones:

  • The alcohol industry
  • The gambling industry
  • The cryptocurrency industry
  • The financial services industry 
  • The online gaming industry
  • The travel industry

As well as the industry your business is in, the payment processors will also look at the following things when placing your business into an appropriate category:

  • Your average transaction size
  • The incidence of fraud within your industry
  • Your refund ratio
  • Your general financial stability

Low-Risk Merchant Accounts

A low-risk merchant account will typically be offered to a business that operates in an industry outside the high-risk list. A business like this will also probably deal with a lower size of transactions, fewer incidences of fraud, and a lower rate of refunds.

These factors would mean processors would deem there to be a reduced risk of financial turbulence within the business, which would be reflected in the fees the business paid the processor. There's also more flexibility with who to choose as your processor, as many of them are happy to offer you an account if your business is low-risk.

However, though low-risk businesses are able to access lower fees and a broader choice of merchant accounts, the account they have will also come with some drawbacks. The processor won't expect anything out of the ordinary, so if your business suddenly starts making a large number of large transactions, or experiences an influx of refund requests, the account could be frozen.  

High-Risk Merchant Accounts

High-risk merchant accounts are offered to businesses that operate in a way that payment processors deem as high-risk. This could be because of their industry, the way their customers tend to pay, or the size of a typical transaction. Whatever the reason, high-risk merchant accounts come with generally more baggage than their low-risk counterparts.  

Despite their name though, high-risk merchant accounts do have some benefits over low-risk accounts. If, for example, the typical transaction you process is large, you'll likely be deemed as high risk, but this means large transitions wouldn't be flagged as suspicious, whereas they would with a low-risk merchant account. 

That said, there are higher fees you need to pay if you have a high-risk merchant account and it can be tricky to find a processor that will accept your application, as many avoid high-risk businesses. 

How To Get A Merchant Account

If you need help finding a merchant account for your business, look no further.

We can compare multiple payment processors and providers to find the best deal available to you. All you need to do is provide us with some basic information about your business and we will do the rest. Click below to get started!

Compare Prices Now

FAQs: Your Merchant Account Questions Answered


A merchant account is a special type of business bank account that allows you to securely accept credit and debit payments. It acts as a middleman between your business and the bank that provided your customer with the credit or debit cards they use to make their purchases. 

If you want to take payments electronically, you need a merchant account. A merchant account is needed to facilitate the movement of money from your customer's bank account to your bank account.

High-risk merchant accounts are offered to businesses that operate in a way that payment processors deem as high-risk. This could be because of their industry, the way their customers tend to pay, or the size of a typical transaction. 

Whatever the reason, high-risk merchant accounts come with generally more baggage than their low-risk counterparts.  


Explore Providers Today